Eukaryotic cells respond to changes in environmental oxygen supply by increasing transcription and subsequent translation of gene products required for adaptation to low oxygen. In fission yeast, the ortholog of mammalian sterol regulatory element binding protein (SREBP), called Sre1, activates low-oxygen gene expression and is essential for anaerobic growth. Previous studies in multiple organisms indicate that SREBP transcription factors function as positive regulators of gene expression by increasing transcription. Here, we describe a unique mechanism by which activation of Sre1-dependent transcription downregulates protein expression under low oxygen. Paradoxically, Sre1 inhibits expression of tco1(+) gene product by activating its transcription. Under low oxygen, Sre1 directs transcription of tco1(+) from an alternate, upstream promoter and inhibits expression of the normoxic tco1(+) transcript. The resulting low-oxygen transcript contains an additional 751 nt in the 5' untranslated region that is predicted to form a stable, complex secondary structure. Interestingly, polysome profile experiments revealed that this new longer transcript is translationally silent, leading to a decrease in Tco1 protein expression under low oxygen. Together, these results describe a new mechanism for oxygen-dependent control of gene expression and provide an example of negative regulation of protein expression by an SREBP homolog.